Service dominant logic relationship marketing examples

Essentials of Customer-Dominant Logic | Tore Strandvik and Kristina Heinonen -

service dominant logic relationship marketing examples

The Service Dominant Logic has generated a great deal of debate in the marketing domain, in particular within services postmodernism and relationship marketing is shown in example the S-D Logic recognises the importance of the. Key Words: Service-Dominant Logic, Service, Relationship Marketing. . relationship marketing, for example, is the recognition that you cannot describe what. goods-dominant logic (G-D logic) of marketing is shifting toward an S-D logic customer and market orientation, services marketing, relationship marketing, quality . Also, the tangibility of this definition helps readers to envision “fuzzy” ethical.

A major contribution to marketing thought internationally, this seminal title presents a powerful in-depth analysis of relational approaches to marketing where the three words relationships, networks and interaction are king.

service dominant logic relationship marketing examples

The book effects a dramatic shift in the fundamentals of marketing thought, with the author's refined model of thirty relationships, the 30Rs, presenting a sophisticated and cogent challenge to the traditional 4Ps schema. Previous editions were widely praised as breakthrough texts in the field, combining incisive and searching analysis with an accessible and pragmatic approach to putting the theory to work.

This third edition is the first book on relationship marketing and CRM to integrate the ongoing evolution in marketing through the service-dominant logic, lean consumption and the customer's value chain, the augmented role of the customer in value creation, the increasing importance of customer-to-customer C2C interaction, network-based many-to-many marketing, and marketing accountability and metrics.

It addresses both the high tech, information technology aspects of marketing and the high touch, human aspects.

service dominant logic relationship marketing examples

Further, customer-centricity is suggested to be broadened to balanced centricity, a trade-off between the needs of all stakeholders of a network of relationships. Examples, cases, concepts and references have been updated. Finally, this paper will provide some suggestions on how industries may use it at its present state.

Lusch and Stephen L. Vargo, in their award-winning paper, present a new marketing perspective they termed as the service-dominant S-D logic of marketing In this new perspective, the authors present marketing in a manner where goods and services are no longer viewed in the same, conventional sense.

Applying this viewpoint to the case of automakers such as Toyota or Holden, for example, the S-D logic states that these companies are not in the business of selling cars. Rather, they are in the business of providing mobility services to the consumer through, in their case, the cars that they manufacture. The S-D logic of marketing also re-defines the relationship between the organisation and the customer where the latter has been promoted to a co-producer of value who is constantly communicating with the firm to improve the quality of the offering Vargo and Lusch,2.

In this sense, businesses are regarded as continuously-learning organisations who do not create value by themselves but, rather, are only able to propose offerings to the customer. Vargo and Lusch attribute this change of perspective to many developments that have been occurring since the middle of the twentieth century when scholars gradually recognised the importance of services. Zimmerman and Penrosefor example, deemed human skills and knowledge as the most important resources and not the natural resources on which these are applied.

Gummerson also contributed to this shift by stating that activities and things alike render services to the customer— Parallel with the rise of importance of services, Vargo and Lusch also reasoned that the current view of marketing could not produce a unified framework because some of its underlying principles could not be applied to services.

A number of scholars also claim that the present goods-dominant logic may hinder future development of the field of marketing Dixon; Vargo and Lusch2 thus their call for a new perspective. Benefits of the New Logic Judging from the amount of recognition garnered by the paper and the generally positive reactions that was reflected in the Otago Forumthere is little to no doubt about the relevance of the S-D logic among academics.

But since Marketing mainly exists for the purposes of the organisation as well as for the benefit of society Wilkie and Moore ; Websterthen it is important to consider how this new philosophy affects the two entities and, more importantly, how a firm may apply it.

This section will divide the task by first viewing the relevance of the S-D logic to consumers. Afterwards, it will discuss how it may be useful to a firm.

S-D Logic and the Consumer. First, it is important to note that market-orientation and learning organisations are concepts that have been around for some time.

However, because of the prevailing G-D logic, it has been difficult to shift the focus from products to consumers, thus making it also difficult to fully implement the above concepts. So then, theoretically speaking, by adopting the S-D logic of marketing—with its emphasis on the role of companies as continuously-learning organisations—firms will no longer be encumbered by the above limitations and the consumer becomes a co-producer of value.

Gummerson states further that the S-D logic may set the stage for actual implementation of the marketing concept Thus adoption of the S-D logic of marketing could potentially pave the way towards improved offerings and perhaps an even more responsible way of marketing. | Total Relationship Marketing | | Evert Gummesson | Boeken

S-D Logic and the Firm. The reason for this evolution is most likely related to changing business environments. It should be noted that different perspectives have an indicative position in Figure 1 to depict the fundamental differences.

In practice, research might exist that falls in between perspectives and the boundaries of each perspective are less distinct. Different views of marketing Extended from Strandvik, When emphasizing managerial scope and focus, CDL represents a unique perspective compared to the other perspectives. The unit of observations is different as well: Moreover, contrary to traditional service management literature, CDL suggests a shift beyond customer needs.

This view is consistent with the needing concept Strandvik et al. Regardless of how providers view markets and their offerings, customers will ultimately construct the market through their sensemaking processes.

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This view is anchored in considering the company and its transactions as fundamental. Market orientation has been defined by Kohli and Jaworski The rise of Services Marketing and Management in the late 70s and early 80s brought the differences between physical products and services into the discussion. One way of describing the differences was through stressing the intangibility and the processual nature of services compared to physical products.

At that time, services marketing seemed to be fundamentally different than so-called traditional product marketing, which often relied on marketing communication.

Services marketing introduced the importance of front line personnel. Services marketing also introduced and emphasized customer perceptions of services, and researchers and practitioners became occupied by measuring perceived quality and perceived value.

Total Relationship Marketing

Still, the main focus was on company-controlled service encounters. In essence, the relationship became the offering that the provider was selling. There was also room for a more traditional interpretation of what a customer relationship approach means: This tailoring according to customer needs may occur at the design and delivery level or at the implementation phase, which means that the final solution may be completely customized or it may have different standardized components with a customized assembly Nordin and Kowalkowski, Depending on the level of customization, offerings may require alignment and adaptation with different network partners Matthyssens and Vandenbempt, Service-dominant logic emerged as a new perspective a decade ago.

Initially focused on service, it later evolved into a mindset on organizations, markets, and society Vargo and Lusch, ; Lusch and Vargo, The main premise of SDL is the role of service. All actors are seen to be involved in a service, i. The main concepts of SDL include co-creation and value in use with a high customer involvement.

The notion of service exchanged for service results in an emphasis on service systems or service ecosystems on a high abstraction level. As a result, the producer-consumer divide disappears and is replaced by generic actors—beneficiaries—involved in resource integration and service provision. Both perspectives share the view that interactions between the provider and the customer are essential. SDL was initially built on ten propositions, which were later condensed to four strongly held assumptions, labelled axioms.

SL does not share these axioms, leading to differences in how service is portrayed. CDL rejects these axioms as well, but ends up with slightly different views on service and business management than SL due to more strongly prioritizing the customer. Although service design is an interdisciplinary field covering a variety of approaches Kimbell,there is a focus on the practical development of a specific service or service system.

Designing for service instead of service design has been used as an expression for an open approach where service designers view design as a platform for action involving different actors Kimbell, The network of actors or integration of offerings is another approach to marketing and business. This direction of research emphasizes the relationships, interdependencies, and interactions between the actors of the network on an aggregate level Ford, It is argued that both the buyer and the seller can take an active role.

This is in contrast to viewing industrial buying behaviors as discrete purchases made by a passive market. The IMP group also argued that the processes of both the seller and the buyer should be analyzed simultaneously.

At the other extreme of managerial focus is the research on consumer cultures and practices that in essence emphasize aggregate consumer groups and collectives. The focus of Consumer Culture Theory CCT is on the dynamic relationships between consumer actions, the marketplace, and cultural meanings Arnould and Thompson, At the same time, providers are enabled and restricted by capabilities, resources, business models, and strategies in their own world, which is represented by the second dotted line.

It is assumed that each customer follows an idiosyncratic logic that is possible to identify and that customer logic can be categorized into a smaller number of logic types.

Service-Dominant Logic: Toward Advancing Social Marketing

Customer dominant logic of service. A differing view of interactions and co-creation divides the perspectives. SL and SDL would emphasize interactions because interactions are seen as the connection between the provider and the customer. As SL points out, it is the instances of interaction where the provider may influence the customer, and also adapt to the customer. Interactions are considered as designed, controlled, and recognized by the provider.

SL emphasizes direct and indirect interactions between the service provider and customer. Service providers have the role of value facilitators and value is uniquely perceived and determined by customers. Value is viewed as being created in three spheres: In the customer sphere, it is argued that customers interact with other customers and may thereby socially co-create value within their social ecosystems.

These spheres correspond to the initial CDL characterization Heinonen et al. Instead, a broader scope on use is employed, meaning both physical and mental use. CDL distinguishes between the different roles of actors involved in the service and recognizes customers as the focal reference point.

service dominant logic relationship marketing examples

CDL suggests a customer ecosystem, or a system of different actors experienced and constructed by the customer. The customer ecosystem does not consist only of persons and firms but also of immaterial resources such as hardware, internet of things, and cloud services. SDL represents a systems dominant logic, where the interest is not on specific actors, but on the system itself.

Consequently, SDL would not frame a situation as shown in Figure 2, but rather would argue that in addition to the customer and the provider there are other actors present that determine the process and outcome.

SL has a managerial focus with particular attention given to interactions, which are viewed as incidents where the provider may influence customers. Each of these service perspectives would suggest slightly different interpretations and implications in any particular situation.

All of the suggestions might simultaneously be valid—the key question is for what purpose a perspective is used. CDL is intended to provide managers with guidance to understand markets and customers. These fundamental differences result in addressing marketing management issues in a novel way. For instance, the traditional service management literature assumes that service is largely controllable by the provider, whereas CDL posits that—in general—it is the customer who controls service situations.

It is possible to argue that the aspect of control is an issue in many markets, and due to increasingly empowered customers Seybold,this direction will most likely continue in the future. The emphasis on the service-provider interactions leads to a focus on instances where the provider has a direct contact point with the customer. This leads to a concentration on what kind of customer information is needed, how such information can be gathered, and how information should be interpreted—in other words, market research and customer understanding.

The role of marketing ranges from a simple organizational function to the strategic foundation of a business. CDL takes this broad perspective and thereby transcends the limited functional view of marketing. CDL also takes a broad approach to the concept service. Service has different interpretations, ranging from the traditional view as the outcome of provider activities to more recent views of service as a business perspective. By definition, CDL covers both interpretations of service, and can be seen as a customer dominant logic of service.

Hence, a company applying CDL allows its business to be dominated by customer-related aspects, rather than by products, service, costs, or growth. As such, customer dominant business logic takes a different approach compared to service dominant logic or service logic, which emphasize service.

service dominant logic relationship marketing examples

Future research is needed to consider differences between marketing perspectives and acknowledge the ontological roots of different concepts and vocabularies. A key issue is to challenge prevailing assumptions that are mostly provider-dominant.

The logic is assumed to be rather stable and is based on a holistic gestalt representing the individual. Future research is needed to develop methods and categorizations of customer logic. The idiosyncratic customer logic is different from the emphasis on aggregate concepts such as customer cultures, practices, and collectives, and traditional customer behavior and decision making research focused on specific purchases and specific products.

service dominant logic relationship marketing examples

When attempting to innovate offerings, managers can begin with the outcome that the customers envision in a certain context, rather than creating a proposition or promise representing what they themselves envision as an offering that could provide value.